The medical expenses have added up recently. Our family has over $700 in medical costs right now. All on eye glasses and dentists – wow! Good thing we have a Flexible Spending Account program at work, and that I still have enough to cover all this! For those of you who may not be familiar with a Flexible Spending Account – it’s a program an employer can offer (usually with a third party vendor) that allows employees to put aside money tax free for future medical needs. You are still using your own money, but you are doing it tax free and that can be quite a savings. The two major drawbacks for a Flexible Spending Account are
(1) It is a use it or lose it account. At the beginning of the plan year you estimate your medical bills. At the end of the year if you have not used it all, you lose it. So a lot of thinking and estimating needs to go into it.
(2) Waiting for the reimbursement. It can take several weeks until you receive your money. On several ocassions I have had to draw money out of savings to cover a bill until I received the reimbursement.
Overall, I really like the Flexible Spending Account, although I wish the government would allow you to roll your money over into a new year like other plans.
Anyway we’ve been hit with a lot of expenses lately – medical, car repairs, lawyer bills. Ouch! I’ve had to do some robbing of budgets to get everything paid. And although I hate to do that, at least everything is paid and no new debt! Being flexible is really important in home finances. We can’t plan for everything, and sometimes as the commercial says “life comes at you fast”. The main thing is that we are still saving more than we are spending, even after taking a few hits the last few weeks.
{ 2 comments… read them below or add one }
JD,
our workplace uses a debit card (it’s called the “Bennie” card for benefits) for FSA’s. All of the money that you budget for in a year is credited to the card at the beginning of the fiscal year. A company named Employee Benefit Data Services administers it. It eliminates waiting for reimbursement and might be worth asking your employer to consider.
I’ve never had an FSA with my job, but I still don’t get the concept of “use it or lose it”. If I contribute $X dollars to the fund based on expected medical expenses, and then I’m fortunate enough to *not* need said funds, why in the world would I lose them? And if I do lose them, who gets them – my employer?
It’s *my* money and no one else should have the right to it, just because my family and I were healthier than I expected in a given year. The “use it or lose it” clause needs to go away for this plan to be a clear winner.